Cyclic AMP is known to act as a chemoattractant during aggregation of single-celled amoebae and has been suggested as a morphogen during cellular differentiation and aging in the multicellular stage. We have tested for the enzymatic potential to establish a cyclic AMP gradient, by localization and characterization of enzymes related to cyclic nucleotide metabolism. An alkaline phosphatase specific for 5' AMP was found to be localized in a narrow band of cells at the interface of the prestalk and prespore zones. A displacement immunoassay was used to show a cryptic enzyme in sections dissected from stalk cells, and spore cells. By utilizing a sensitive radioimmunoassay for adenylate cyclase we found the activity was strongly localized in prespore cells. An inhibitor of adenyl cyclase was found in the early stages of development and could, if present at the culmination stage, result in the loss of activity in prestalk and stalk cells. The degradative enzyme, cyclic AMP phosphodiesterase (PD) was experssed as an opposing gradient to adenylate cyclase. Little or no PD activity was observed in prespore cells, while an increasing gradient of activity appeared in the direction of stlak cell differentiation. Characterization of PD from extracts containing both types revealed the presence of both a high and low Km form as well as a 40,000 MW inhibitor of PD. The localization of these enzymes in specific cellular regions of the individual shows that the potential exists for establishing gradients of the suspected morphogen, cyclic AMP, during pattern formation and celluar aging in Dictyostelium.